LUXEMBOURG (Reuters) -- The European Union has lifted sanctions on Uzbekistan, despite concerns about human rights in the former Soviet republic.

Although many EU states are concerned about the rights situation, the 27-country bloc wants to boost relations with a country that could be an important energy supplier and a route for supplies for the Western military mission in Afghanistan.

EU foreign ministers said in a statement during talks in Luxembourg there had been progress on human rights.

"To encourage the Uzbek authorities to take further substantive steps to improve the rule of law and the human rights situation...and taking into account their commitments, the council [of EU foreign ministers] decides not to renew the remaining restrictive measures," the statement said.

The decision removes an arms embargo, the last of the sanctions imposed over a crackdown on protesters in the town of Andijon in 2005, in which witnesses say government troops killed hundreds of protesters.

The EU decided a year ago to lift visa bans on top Uzbek officials to reward what it said was progress in human rights but kept in place the arms embargo for another year.

Human rights groups have urged the EU not to end sanctions, saying there has been insufficient progress on human rights in the Central Asian state, a potential source of EU natural-gas imports.

"If the arms embargo is lifted without an investigation, the EU will be making a mockery of its own demands and the only form of international pressure over Uzbekistan will be gone," Amnesty International said last week.

The EU has been trying to improve ties with Central Asian states to help secure future energy supplies and diversify away from Russian gas and oil.

Uzbekistan, which borders Afghanistan, has shown signs of wanting better relations with Europe and allowed the transit of nonmilitary supplies for U.S. troops in Afghanistan this year.

But it rebuffed calls to do more to protect human rights during talks with the EU last month, when it told Brussels to improve its own rights record.

Rights groups say Uzbekistan has jailed thousands of dissidents and political foes of President Islam Karimov, a charge the government denies.